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Archive for October 13th, 2013

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Inflation is largely a corporate created scam to redistribute income from you to them, and then pass it on to their already rich shareholders. This keeps profits, share prices and dividends rolling upward.

Here’s how the scam works. In virtually every sector of the economy where major corporations dominate, the largest corporation will announce a price increase to take place in a week, or a month, or two. The other so-called rivals will usually announce matching or nearly matching price increases a few days later, if they decide to go along with it, and most do. Sometimes, the lesser so-called rivals refuse to increase their prices. This forces the original price raiser to retract its price increase. That doesn’t happen most times. You can read this stuff in the business sectors of most major newspapers. It’s an easy to see rigged game against the 99 percent.

The economist John Kenneth Galbraith noticed this scam, and mentioned it in his 1973 book, Economics and the Public Purpose.

The federal government is a willing partner in this scam. Since 1980, the feds have changed the way inflation is measured twenty times, and always with an eye toward making inflation smaller. That way there’s no public uproar over these corporate price increases since the government’s telling everybody a big lie. Most people know inflation is higher than what the government says it is, because they buy stuff.

Today, official inflation hovers around 2 percent. However, using the 1980 standard for measuring price increases, today’s inflation rate is closer to 10 percent.

There’s another way income is redistributed that’s closely related to this scam. Corporate management orders their goods packaged in smaller portions, but at the same prices, or higher, than what people are charged for the bigger package. That’s why the 16 ounce package of bacon is often 12 ounces nowadays. And it’s typically at a higher price than the 16 ounce package just a few years ago.

When a package can’t be made smaller, corporate management will simply order the reduction of the quality of their products. That’s why the best drums were made fifty years ago, according to a couple of my drummer buddies. As the government has redistributed income from the 99 to the 1 percent over the last thirty-three years, drums have been made more cheaply in terms of quality because people couldn’t otherwise afford to purchase them since their real income is about the same as it was in 1980, or less.

In part, the result of these scams is that the 99 percent now earn about 68 percent of US total income, compared with 93 percent in 1980. That’s why demand is weak, and has resulted in pathetic job creation and continued wage reductions. In effect, along with free trade treaties and a few other government income redistribution policies, this transfer of income is the principal reason why the US economy remains mired in a low-grade Great Depression. It’s also why the economy is rolling toward another Great Depression.

President Obama and every member of congress know all of this stuff. But corruption is so massive within the government that nothing will be done about the coming economic train wreck until it’s too late.

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